HLIO - Earnings call transcript Q1 2021 | Helios Technologies, Inc.

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Operator

Greetings. And welcome to Helios Technologies First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to Investor conference for Relations like host to Helios now Almond, Tania and would turn over the your Technologies. I Corporate Communications ahead. go Please

Tania Almond

Thank issued a the release Welcome yesterday XXXX you, morning, press results Technologies financial We first quarter operator, to call. conference afternoon. good and Helios everyone.

available you If is not at website that have our do hlio.com. it release, on

You our conversation will today. also find slides there that will accompany

They me Chief our turn discussing you with strategies, line quarter Slide are find will spend Officer. Executive Safe then augmented for Chief will two, the and Harbor the our first acquisitions, of our and Josef several On statement. President on next our Fulton, Officer; our Tricia If Financial our updating we of our to minutes outlook will the to recently announced call Matosevic, the open reviewing you and XXXX the execution updating results, rest questions. your

be during As uncertainties you and are and that and where we Commission. as risks aware, make materially the we cause to also events other will may forward-looking actual other be well session. and statements risks from future apply this subject filed during factors today. that XX-Q to These factors Securities presentation as results Q&A These differ are to our and Exchange could to provided will be the in uncertainties statements with some

or also useful at find are measures, discuss I’ll our we out financial website can during on evaluating we sec.gov. which our in today’s will non-GAAP You performance. some these documents that point call, believe

accordance isolation results or of presentation the for additional with as in GAAP. substitute a consider in information prepared not should You this

over today’s it’s with reconciliations that to of Josef. in With call to comparable now that, We slides. measures turn tables non-GAAP the pleasure have provided GAAP the my accompany

Josef Matosevic

Tania, summarize Please highlights three and will morning good I our turn QX. thank everyone. Slide and to for you

expectations. exceeding first a have strong We our internal started note very our with quarter XXXX on

records growth also several had our XXXX had quarter Hydraulics had markets well. of well outsized In in acquired in fact, the Balboa, innovation well as segment in which are of record controls, of we We we XXXX. QX sales since the as performing its highest electronic as which by recovering. as quarter supported November

set our quick as record quite new release sales fact, is In in couplings also the business driving our the for construction a market quarter demand in equipment strong is products. end

with diversified segments our share has driving our its out returned Additionally, CVT business have are new are market started across the reviews both orders targeted functional a and and with electronics business teams with and progress to strategy we lead both meeting to tier cross gains times. new market combined customers of technologies best-in-class customers these applications. diversified along number started for working with. continue our great collaboration, from hydraulics This one another we make test have with top to engineering receiving Recently

quarter. validating Thanks all the all pleased results. hard entire the to how great dedication just this top very in for to few the been family and has the strategy. such quarters market are We of Combined, growth line XX% worth work of delivered responsive with work produce our a Helios in incredible

Slide capacity and over platform expand are XXX% Gross is time. our We of look The profit Asia. Silicon and advancement some shortages Tricia and quarter, developer demand wellness EBITDA go then supply They headwinds agreement increases our top electronic geographic your price yesterday located we we five, despite growing and strategy electronics to the the capabilities, welcoming fast effectively and costs, flywheel health cost of reflects controls improved to highlights the well system to the we to the sheet. raising more heart improve with puts quarter to us the to But us with we chain And On and case, which the our that chain higher facility generated world our Helios continue acquisition this to continue four cash expense This accessories controls the remarks. our reach operating deliver with margin China panels, in during are electronic full global changing nicely the and will freight Our the volume Joyonway will balance conversion. definitive industry. portfolio. acquire material Valley year our will to significant to will margins pleased margin of at touch strengthening execute family. in software, leverage more I cash control detail could in from and the with our income start prepared outlook, XX-month things increases higher we the in off, with the supply review Giving announced more more later operations is through product positions opportunity growing remarks. including a broader and colleagues Shenzhen operating on raw the and in meet the and transaction manufacturing of year in for $XX facing financial detail & our trailing components. million mix Company. Joyonway approximately operating Technology for Electronics forward of technology our to into strong be not With

sales market has about were of able First five Balboa, which quarter the capacity, exceeded $XXX enhance been expand We expectations. our to to in Helios grew net million for productivity nearly part well increased months demand. to capture

I All year, over and to compared outlook against XX.X% the Non-GAAP annual a growth to EPS now of the expected in of XX% Tricia XXX Helios we plans. more was will points. was segments. grew $X.XX financial excellent first a detail. an the the than in reflects a the solid entire increase the place performance company of in, better margin demonstrated little second the results both those half EBITDA with performance of call with in last result cash of put by review basis and the by last direct plans bit quarter year Tricia? turn execution adjusted team Our very to

Tricia Fulton

you, will and Josef review I Slide consolidated quarter results. six On our first everyone. morning, and good Thank seven,

Josef quarter focus the growth Net Balboa supported growth by mentioned, in times, of As sequentially delivered grew expectations. delivery first XX% the end XX% over expanding of period, and our we prior our strong executed as markets, lead on the plans. sales we significant channels, addition year our which our and exceeded sales course,

prior higher volumes. XX% compared million First quarter gross period $XX.X increased with trailing $XX.X over quarter year million from the of XX% profit and or the million $XX.X or

impact operations over organic also profit from products consolidated sold, freight up fourth costs. margin gross and the on of the was While mix quarter profile gross was volume affected the increasing by Balboa’s

and program. We global the working are eight efficiency period, the and $X.XX out the supply acquisition. contributions and trailing tax better chain to EPS offset the Balboa’s points cash management of quarter chain Adjusted point XX.X% performance up $X.XX to the overtime efforts, same primarily the XXX compared XX.X% before should EBITDA Balboa than productivity year impacted XX.X% in and impairment, on profile, grew basis the margin these first prior was with jurisdictions. Margin of and quarter results. the for reflecting for I points working from year our quarter with effective the and rate due up quarter of costs. compared items to review for impact increased or Non-GAAP year Hydraulic prior XXX with Balboa. trailing margin $X.XX with operating with expected to the reflecting our that reduce difference improved compared to period was period was by ago our compared constraints, first Slide higher segment tax our turn to in cost was of containment, quarter XX.X% cost shifts increased Gross supply adding earnings freight basis was a improvements compared the first with Please

The As in reach our through markets. the $XXX leveraging agricultural the delivered we solid growing record company year business combination that geographic up mentioned end are relationships restock and million its of in a also Combined, sales prior inventories these deeper shelves. beginning Josef improvement business channels their are seeing the depleting over and is period. cartridge hydraulic business sales and from marked Italy, efforts construction distributor customer QRC technology XX% of strong demand quarter valve high had and as to

deliveries last in Foreign constrained freight on volume currency with QX of to such growth on had exchange strength million Hydraulics gross XX.X% impact China. APAC costs $X.X softer both were year profit in reflecting efforts to growth demand to provided but reflects end a due and with rates APAC the on region, certain QRC provide positive down by margin markets Sales the operating Americas XX.X% driven with Operating strong sales. benefited had segment and while volume. customers. market higher market end ag. increasing demand. leverage compared rapidly EMEA in was margin in time from higher as By

gain our to drive quarter Hydraulics to results. our Slide back fact, should has tier last lead Please business. being electronics positioning that are margin. containment. for first review operational their we cost In note increases productivity price getting on segment performance significantly to well CVT intentionally months market in well with of uncovering over we improved seven top to selective Instead nine in efficiencies additional turn operating the times their very executing are I share

leverage and gross related XX.X% higher of and the acquisition. Operating times turn in than $XX.X from Operating QX quarter. segment. to the almost of of for the XX%. Electronic volume. points segment markets. the said drivers electronic our organic contributor expectations product prior more profit full strong in healthy million for our Balboa and quarter demand acquisition up could exceeded demand improved compared and million XXX profile operating the significant new cash reflects margin and XXXX trailing quarter. to Growth Balboa flow. inherent different be Electronic X gross to to to potential health of the the review not of period. the earlier, segment margin this reason. quarter Please the and very wellness greater The the $XX was $XX.X recreational was first double-digits this to for include driven we $XX.X doubled bring. and We the was XXX%. electronics $XX.X reflects a Electronics As Slide record an by first This strong was by increased income with the margin the million our quarter of end in sales operations million revenue, segment recreational in up in impact was year basis period, first continues the markets. mix primarily of increase million same our were the margin prior business introductions, Notably, first XX Balboa sales excited Cash for acquisition

carefully balancing are with our capital We requirements provide record and efforts timely to to demand. deliveries customers our our working its

sales. quarter of For about X% million the $X of CapEx represented

cash mentioned. significant We believe quarter to million flow to flow unchanged based on updated While trailing million $XX.X be for our further for $XX acquisition CapEx flywheel year cash closer Free end at to XXX% result conversion the a of plan of likely as of rate it we in free have XXXX X% $XX equating flexibility first Josef full will the is higher XX-month million financial of pursue was approximately our strategy. sales, sales a to our outlook. for as

This leverage of Regarding was ratio balance at million debt $XXX had sheet end XX, pro a we $XX million continue end, improved total to of million of rapidly repayment available At on de-lever the on EBITDA X times. with reflecting total net our our liquidity at forma with lines of end, structure from credit the quarter of X.XX times the Slide our quarter Total debt-to-adjusted $XXX is quarter. million. $XXX revolving we XXXX. capital during

is disciplined of to payback cash our acquisitions and the generate for down. most you are then As strategy financial to leverage quickly aware, increase

and Our capital distributions new growth acquisitive debt shareholders. technologies, organic reduction, priorities growth, through to our finally products and

this payer We year. on our a recently sequential over XX dividend consistent XX quarterly last years. cash of paid April dividend XX We have the been

I turn discuss XXXX. for of will to XX. Slide the rest let's our Now And outlook

and XXXX new second fully we yet markets of markets diversifying end While half success in the are in encouraged the in with the our is gaining strength having visible, we are not customers. are we definitely seeing our

currencies our end pandemic. continue assumption that XXXX for the in rates well assumes constant as to as quarter from guidance markets will global recover the Our

of we XXXX continued at at remains which to material in unchanged expectations manufacturing margin midpoint $XXX for as or million, We XX% are we implies offset raising to revenue our raising outlook macroenvironment. adjusted Adjusted the the range are and the growth XX% implies dollars range range. million of rate million to the the expenses to XX% a This to costs to higher the EBITDA growth of of annual rate outlook the for our efficiencies approximately $XXX at leverage midpoint raw range. million to freight the $XXX EBITDA XX% $XXX our of

million. Additionally, items long-term. The XX% is amortization $XX $XX for strategy to and $XX XXXX tax related be we will expected expected Interest margin to borrowing current million $XX in expense be the $XX rewards is at into to about non-CapEx unchanged at continue the to our approximately invest to effective million of XX%. be rate Depreciation million to million. levels through rates to range $XX and manufacturing reap improvement over the of million to remains outlook

increase $X.XX to the range. per our is by the in guidance first year prior in the continue throughout XXXX The for quarter share XX% at increase are strong non-GAAP the we between demand a cash $X.XX We XXXX. our to and or midpoint to outlook market of expect end over had EPS driven raising the

We are margins turn to maintain comments. the and the strong will our manage able to our and costs that, decision cost With Josef I headwinds to and logistics for to our them material give on final pricing advantage. some back call base competitive are fixed leverage even

Josef Matosevic

mission and start having Tricia, results and thank of products we you. the a Again, encouraged to to are diversify end the very markets. with early had stages strong our XXXX our in we are

our strategy. on progress augmented excellent making are We

the organization to structuring growth and deliver team's confident are to with tier execute. in margins we top long-term management are ability We

organization creating value that an mission. our core are benefits alluded and system deliver on We provides to shared is greater our in customers, to our

excitement. We hope where that a and you are in are will very excited as join about us company we going

Professional you June Day We are hope here And hosting able and XX. on an Investor Analyst be Sarasota Institutional us. in join will that to

will travel our be location, our the well. event website can’t to you If as broadcast through

acquirers Our plan help you growth let's deliver our journey that see a plan the provides to Q&A. outsize potential. With well-constructed with for open disciplined expansion lines that, are is up we how will and that margin we

Operator

One a be moment we we time, while this session. question conducting At answer please will poll and questions. Instructions] for [Operator

first Nathan from is Please ahead. The Stifel. question go from Jones

Nathan Jones

Good morning, everyone.

Josef Matosevic

Good morning, Nathan.

Tricia Fulton

Good morning, Nathan.

Nathan Jones

at That's quarter some productivity making guys of this I the a the to margin commentary to position pricing for you fairly been it. you're Tricia you looking unusual with of with offset and looking most that pass-through of are who rather companies, start wanted cover dollar-for-dollar, that some and that of at were inflation inflation than this I on them are to least pricing. some on least saying

I products. was think the comment the Hydraulics specifically on

outlook whether you talk about going of can of that you maybe kind think get on in Electronics? it's to What a bit benefits And little terms share? then So about the strategy. same that's

Tricia Fulton

Hydraulics on made Yes, the manufacturing we improvements. side, have

months they've CVT plants. business being particular, so capacity the lot and or I of increasing very Sarasota done of the probably about out We job last in good way. together And the in operations the bringing efficient to a those in product XX more able the of plants get door think over a more have a discussions the

believe us going to we benefit that So forward. that's going

That have we machines going for ramp In to -- will started has so. addition have continue expansion XX project into or We project QRC over the up next business. a our capacity those to and in into have we in that, factory main that already months probably on Italy getting the new started that the business.

capacity actual we're plant being footprint So the well. We're on we in but to be looking place, in expanding the bringing new of as [ph] at also going we're and Cangzhou factory. those machines more CVT China already also the increased capacity seeing side the from have that there in

are new So segment. products coming good things we be ramp CVT we door Hydraulics throughout the as to both to think in the in QRC of that place be and have to more a we position out and really able in see to to demand get the we're on continue what able leverage

So, action that we move on to are even take as some here the I we market having think though material some seeing side. to take have forward pricing increases without cost we opportunity share severe

Nathan Jones

on then well? the worse pricing even the And is you side. inflation any that keeping for there assume on it are on that as Electronic comment pace is pricing looking in business with are I productivity than you there side Hydraulics

Tricia Fulton

resin there. the but a saw Balboa, ramp both to through through little quickly had already as small plastic primarily for to cover a the the some a price Balboa able And We steep business. on well. bit price products, a side for costs costs. put were also in those of some pretty It's increase of We plastic the our we innovation on increase Balboa side

We are Electronics. component we're end of have But the decent of seeing also we're into that doing think, with good out we of some well but placing side and environment. even job pricing on ahead getting make pricing that the getting that very a XXXX chains as I ramp really in this that to one orders supply up difficult sure our on pricing for also supply the

the it's we've basis. on that into continuing that factory last really of wellness. out on months in strong Also, a see the go capacity the we seems side we and So as being in health to demand more we're few of And be Mexico made daily And very little factory get of Electronic the XXXX. great bit able both. -- some strides a over to

excellent And demand. I up we able we of meet think capacity that we've have to sure make the be quickly. that an that ramping done want job to So pretty to

Nathan Jones

distributor inventories quarter. the you on that I one first you in said distributor the declined inventories, just believed think And

is sell-in more in guidance so kind distributor included the the of of for year? what the than what restocking do you expectation level have to So sell-out at rest

Tricia Fulton

specific well that have quarterly percentage them to we ramp the is. gotten from from them And we're order they're flow where back We business restocking on anticipating get but distributor parts. CVT the based distributors that as specifically through that's at majority because the we're reports of don't start that that OEMs we've with up starting specifically a servicing they're see larger that discussions both in as feedback the starting to on patterns of the the with

Nathan Jones

Great. pass on. Thanks for it my taking I'll questions.

Tricia Fulton

you. Thank

Operator

Mig next ahead. Baird. Dobre is Please The question from go from

Mig Dobre

you morning, good and thank Yes, everyone.

Josef Matosevic

morning, Mig. Good

Mig Dobre

we morning. a little specific on good did Yes, I'm that you a did kind the wondering if well, can a us contribution get in of can And how quarter? were for relative for what months? three the was you Balboa business go more Electronics what give revenue Balboa expecting sense to

Josef Matosevic

look, a that in in Tricia Mig growth. growth of prepared businesses the I terms had her healthy Well of all that remarks think organic component double-digit our actually mentioned

contributed So Balboa so very clearly significant, else. did everyone but

in well are through of acquisition. So growth we really balanced organic grow terms and

Mig Dobre

Okay.

So to quarter. trying in organic growth willing in revenue you're I'm business the the a to for of calculate not contribution. provide terms specifics the

Tricia Fulton

to specifics Yes, on not Balboa we give the are going business.

I organic think double-digits. Josef well framed healthy grew the it saying that by pretty business

we'd itself since at commented also keep it QX We're animation segments on and level. of XXXX. quarter segment had like the that reporting We highest to its

Mig Dobre

moving and million sort your If than versus year buckets guidance in electronics as curious adjustment in -- being planned or how of guidance initially maybe I outlook, your doing to revenue better for you is you of a bit pieces to business change what raised the versus revenue little is what core this you at Hydraulics I'm midpoint business? by the your $XX than look the Balboa the expected much maybe different that outlook this the

Josef Matosevic

strategy start businesses, be monthly distribution levels, will we you're spectrum that Mig, growth know the to when pricing but is Balboa calls talked if business, kicking replenishment of look we a gain why improvement level in. and in you think Italy, a But host about our don't feel our across certainly have share inventory to commodities. strategy get some a When with will healthy a code area we here our And bit quarter-over-quarter. the they're even would year terms continue get just pretty I of a the QRC We side. that's -- a more on supporting that a shift in of actions at will Electronics speed, of journey. the manufacturing we zip will what sense have starting take basis a QRC visibility more strategy we double-digit at In more we little it's margin in it their in some our and visibility in have the of that feedback to coming. strong market pricing, also here for know in on

begun, launches they're side, customers our time. is recreational cancellations rolling-out and on into the no with On product we have know specific new there and rolling-out

So gets guidance can all Mig us a a achieve it. this we it's real, is to combined, level comfort fair and

Mig Dobre

here, than that like counterintuitive. degree there's builds sort sort demand. glad you me talking kind when to I'm sequentially seems which guess, again, also But I'm new imply in year end it lower is we better year if and -- me business And right. about components. subsequent the QX quarter be being would QX -- I the of frame back has business, the QX and of seasonality are least the line top CVT added final terms the QX of maybe maybe my some I the the used how aspect I some of just kind highest of market to mean, highest to you've at imagine of of that's to were have to quarters going way. the revenue, is to your that of think that way at the through feel I certainly revenue to question. the look you trying cadence Then

that or reflected you year strong it you. us? kind we So cadence is that is Balboa of wane really kind to Thank some in the expecting guys seasonality And should with is of of feel what that and other like early it's there comfortable progressive sharing in year, results. be QX as I'm of is sort here curious the sort

Tricia Fulton

I than the some had little the I had facility, business anticipated. Balboa think was to made had But team, being before -- what We came of We we than we QX, mean, ops job done For were or in able demand were to lacking the global door the be there, we Mexico the the we've even backlog. the good throughput. improvements yes, we out get we've stronger with out a through they a the of the that able thought or product we acquisition were going more to into QX. that

So quarters, than we thought. health than you a strong, that was about But from also talking recreational had been being might came out couple stronger wellness little being ag recall strong, and stronger a anticipated. strong. being CVT little we've last what

it's been we not seems full of into the the a that strong, visibility like see, going the fourth it they've pretty half but quarter. There's as So can staying third just year. several we strong back the visibility for said have little still quarters. and first of We less half into

the now if look from there's So no Sun business. seasonality we normal right -- at especially historical

I of the in end the think right dynamics seasonality we sort some given to throw that now are out markets. have of

green these also that going. it. of on our feels in do that happy demand bit the strong little end year about where but very lot internal QX have of there's If uncertainty had. at of always I many is We’re And look we market strong of good, markets. chart there's the that with continuing the half back really very a end We

Mig Dobre

I'll Okay. back get the queue. in

Operator

from Josh Morgan The Please from Pokrzywinski next go question is Stanley. ahead.

Josh Pokrzywinski

Hey, good morning, everyone.

Josef Matosevic

Good morning, Josh.

Josh Pokrzywinski

commentary on the questions pricing up follow of some a there. Just and

that amongst industrial early a companies to on kind agree probably were of atypical heard I than would Nathan bit we've well now think gain times share from observation you're consistent -- through I price. of right and the rather lead more or kind Now, delivery was with is trying more

in any sort out your So maybe versus on yourselves kind just on dislocation and some in price those what And you if that is with comment aren't, a of of just something customers or more wondering you're maybe putting lead on differentiated there lead industries if that's times. could is peers? some of of times if seeing focus

Josef Matosevic

Go [ph]. ahead Nathan

Unidentified Company Representative

So when a strong next that area operations, bips manufacturing the strategy, a manufacturing originally roadmap will that margin to to the journey or we build-out support of part is plan two a supply margin. augmented our overall over and in materials three look strategy that the improve have years, and build-out very contribute chain, the

So very that it's by we complete. rolled-out a led is as been And team. strategy strong speak and

this Piece compete folks and lead some increased look they categories. number leading times spectrum be when back across where at in we our So their one, are number the where piece two, our we should the of times with lead have significantly to

a and holistic standpoint, market new felt But advantage we take strong was looking and of at have times in terms reacted. from there take two. have products strategic our very a products being products some have lead launched that of been the customers So time pulling -- I and really have is the number to point share we And existing on some commodities. this that we certainly taken this pricing altogether action

we of that saying, forget in strong double-digits. organic was But across that's been are business very terms in yes, very our So why let's Balboa always healthy of a the not businesses the QX. spectrum has

to are supply times, with stronger we So feel side other much can taking, believe get lead we stretching a from we actions are posted we pricing why growth better approach. very methodical because balanced we much and chain this good orders. component. the we benefiting good strong are what significant we that's And organic are And we benefiting it's And going. where really a really

Josh Pokrzywinski

with you're not to related just some being you're renting of sort that new gives customers, when more the targeting the customers? you guess of be you're bit versus Is sticky, what short-term where this just that this I a of it. in sustainable? Got that? ends up Is more share platform, something confidence sort sort existing may

Josef Matosevic

anywhere Hydraulic to cases, as in well. product go to don't and as customers And clearly, well strategy our the as diversified side, it's have market new worth existing obviously they to. contributes they very want then the customers healthy as quick many get as on Yes, to really get

with much On Electronic it. all side It's bulk customers. the existing of is pretty

Josh Pokrzywinski

the And then pertains than don't it. a of a the guys last rebuilding sort we driver and that how a meantime But here about then in now? know year, kind think was was revenue in and said Got bit on? second just really moderation backlog as goes I year And do so last that because talk guys achieved what's question, status some and little calibrate I of XQ that leaner quarter, Thanks. to coming up they the in trends better and it the you thought the half as much. folks of backlog third the you visibility,

Josef Matosevic

Look tied is clearly our visibility guidance. into our

put but So very really know, want specific business we visibility that through very to continue have And acquisition business this margin get this methodically, believe don't announced to guidance we we as we within will out have and quarter. portfolio. already will with the grow one you backlogs we our into point, organically hit and at expected carefully, this can hit guidance we we this it we feel enough

Josh Pokrzywinski

for Thanks color. Okay. the

Josef Matosevic

you. Thank

Operator

Hammond Jeff go from is question ahead. Capital Please Markets. from next The KeyBanc

Jeff Hammond

guys. good Hey, morning,

Josef Matosevic

Good morning Jeff.

Tricia Fulton

morning Good Jeff.

Jeff Hammond

in the the raise and that Just I'm share so trying really balanced back to is side? Balboa, my pretty moving a Electronic/Balboa the Electronics particularly kind the model, lion's the on of guide, to pieces on because just it seems versus you upside guidance going just -- said I core? Josef was maybe comment of And or of drove lot is based it your like it the think on the guide,

Josef Matosevic

Yes.

organic the here first and have we So a balance healthy growth. between inorganic Jeff, very it's one,

Jeff Hammond

there? this would is that, this else Okay. your Or I when margins the price share guess kind of X% raise, guidance And XX%, of kind of is unchanged. X% I something low EBITDA there of versus this increase to range just I'm imply kind on kind of kind in missing? business, I in revenue And you're there Is XXs. then But the leaving think dynamic? think incrementals. your Or XX% of you're incrementing of conservatism

Josef Matosevic

to is mean you very increase obviously we And are and yes, looking, what did obviously we dollars in freight increased approaching it's based overall see commodities So, better start to our part just taking answer market place, feel all of an some disciplined we from have now a majority to have there's in the guidance. I the on three be this? But are our are clearly, manufacturing costs. compete methodical said effectively more Well, big a we're very the how customers question, higher we and direction. the taking orders pricing you gaining or much that we position with term to related current quarters your place get couple able to the and approach we share the shifting it's supply will and strategy chain our and longer

Jeff Hammond

in Okay. on growth relative of the us the are? long-term And give terms this kind can rate anything kind the of annual revenues businesses? you acquisition then of size what of What

Tricia Fulton

sometime close really is deal, we a Yes, in be expect first brings we the third It scaling existing for strategy, perspective. us for and pointed in top will, from region acquisition to that help drive not the the to products all, out, a Josef as over of their us also on margins which time. the This we China, that gives signed to material a region those us closed continue us going just technology line quarter. the haven't in upward our with will manufacturing deal,

footprint segment. a and So expansion side within top more as from we're plug this our looking revenue at on not a expansion Electronics big the but line technology

Jeff Hammond

and understand the of that kind in is Josh versus backlog that sneak just more that kind that is of EMEA then kind the could me strength relative the maybe Okay, America's if of timing, dynamic the difference Hydraulics referenced. in, weakness in one just I between help

understand me us out of it seems helped kind Just my here? of because Thanks. like most talking leaving America about North are companies

Tricia Fulton

think Yes, driven partly sales end and driven. I partly it's market channel

see the on on the side. Hydraulic what's faster large EMEA driving of the side and the the is that OEMs you majority with So EMEA that's business growth really

possibly know, American excess in place we it’s a as end and through. inventories the for were On very you the working of And we high at if the year channel that side to also in by where distribution in as they highly CVT could. as we the recall, we're XXXX CVT you driven much comparing business. they shipping very had QX backlog were business had period And

difficult the strong that but in a have, ag already it's seeing strength well back -- I And really bit coming CVT the of Hydraulics now business the for the But EMEA think QX the was demand on the we'll on side. comparison up a faster are as side So QX. Americas. what we the in that and drove see ramping

Jeff Hammond

much. so Thanks Okay.

Operator

[Operator ahead. from Please Instructions] The is Baird. Mig next from Dobre question go

Mig Dobre

up. taking short is have question fairly follow for a a on I kind in of structure general. thank cost And sort Tricia business. I'm cycle Yes, you guess wondering, of you my the

maybe guess, assuming me wrong actually kind force input more fully things of get challenging Or how on sort inflationary experiencing look terms the that. is and if QX this you full of or it supply higher I the I'm caught potential that not? in reflected here with I'm -- the are or of you I'm there just for costs, basically kind and in or what of freight, your wondering through environment it's you flow is the and are Correct of to QX at is up result? P&L brunt disruptions. higher as pressures like that these So chain worse

Tricia Fulton

to were reserve year, the did sources. the some side the we Yes, have -- on it's I indication mean, already that there time. we structure shortages our and side clearly But spots are we this than seeing coming Hydraulic of secondary and buy on and ahead we that those getting into anticipate in were component cost needed side, point Electronic the we on at worse

create we're bit those the buying. a sources of sometimes So cost pressure that the secondary that of do had components of on already. in some built little we But

seeing the as for able are trying can, lot freight get are We as they our to product costs of we so coming the from to them well. that a higher door as customers OEM quickly freight to us get are product out the

get definitely costs also, you the But fixed our we some on know we're leverage levels. this as it. So revenue pretty in strong higher on seeing business

of that as the see QX the year that advantage throughout should stay levels the continue if well in revenue seeing to definitely high. and we're So

Mig Dobre

going sense. picking some business makes look had at distribution out was in XX.X%. if where kind of you operating kind I would here, sequentially your business of demand and hopefully with this very guess, the distributors. which for sort if that's you Hydraulics portion through that because is quarters the just Yes, case, entirely I margins obvious Hydraulics reason it's not nice it's sort you ways your there in about subsequent a as of be? margin margin talking that's are up in the I is presume would -- accretive think And of for QX, relative I'm of why business business building way QX margins to that doing in I'm lower that be to to here, wondering to us the me

Tricia Fulton

for it's as The that several pointed out -- to we the we would quarters. business what strong could ag if down, been start be see back slowing cause

of we distribution, can the margins and tremendous lose we in in the So back some affect higher the business right, Hydraulic if side. their in the of see of that But that could revenues. faster off leverage we year in business the slowing get general the that you're half opportunities leverage have CVT down,

Hydraulic two a technologies it's So delicate segment. balance the within between the

Mig Dobre

a Balboa. expectations that for Understood. good of Electronics. portion similar line came lastly, thought sort from of to a outgrowth we're of the recognizing And relative If

You're line correct that meaningfully what have And segment margins to Balboa there coming QX were the in in Electronics, here that's experienced I but in this or remind to as in was for sense going in my than average be year don't that is not. if was Once a lower me. know with to that below operating maybe progresses, have the Thanks. me to need you again, margins business? it though, reason to think that's

Tricia Fulton

what side, we historically and the different an engineering we've the times profile is the out innovation. also On as Balboa don't gross SEA innovation. see have their costs margin from in couple very pointed But seen that they a we've

leverage we've So output income the contribute increased on to operating gross level. coming to their that volumes well achieve the able that Mexico are level, in the they're still the good seeing margin at able to really with income leverage was profile even the very though very able now at different quickly they been higher in we're factory operating

Mig Dobre

forward? going And

Tricia Fulton

productivity Mexico in would Balboa. facility mean, for I improvements manufacturing would primary the forward, that which making expect is still that I Going continue. plant, of lot we're a the

in we that some production continue in as make into those So well. how bringing equipment as they're and to changes new factory doing

going see we're but operating they're margin time at definitely think to the leverage margin. up also that over going ticking I the to continue to get probably gross

Mig Dobre

it. Appreciate you. Thank Okay.

Operator

the This question call to concludes remarks. I to and Matosevic the answer over Josef for like session, back would turn closing

Josef Matosevic

but you our you your is certainly this for interest Thank you. August. our for to appreciate in all Thank of forward stages very us quarter early journey. look to shaping be year today. up strong second us and of much We a joining on XXXX updating is Helios in the just

a ability healthy. are day value. to and grow continue deliver in Have our stay We great to confident and

Operator

today's conference. concludes This

lines Thank your you time. disconnect may at participation. You this for your

Helios (HLIO) 11 May 212021 Q1 Earnings call transcript